topic Re: Enlightenment needed... in Credit Cards

Enlightenment needed...

Anonymous — Fri, 10 May 2013 12:39:03 GMT

Why do people need or want so many credit cards? If you don't need all of that credit why have the accounts open I don't think I'd want to manage 8 credit cards. In fact, now that I will have an amex and a card with my cu I think I will get rid of the secured card and the low limit cap one. The thought of all of those accounts stresses me out. I live virtually debt free now and only purchase to help with my score. If I have all that I need and don't forsee myself needing any in the near future (have car, almost house) I think it's best to just garden. Is my logic sound? Please shed some light!

Re: Enlightenment needed...

NCGirl — Fri, 10 May 2013 12:45:45 GMT

I agree with you. However, sometimes cc users need mutliple cc's for the utilization factor. Or maybe you have an Amex, like I do and it is not excepted by small businesses, so added a visa or MC would be smart. But I still don't think that have more than 4 or 5 cards is wise... when all you really need is 2.

Full disclosure, even though all you really need is 1 or 2... I do have 3 and plan to add a fourth, because I want either a visa or mastercard.

Currently have: Amex BCE 6,500, Discover IT 4,500, First National AMEX 3,000... have two sub-prime that I am closing this month, now that I have some good cards on my file.

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 12:52:24 GMT

That's my plan as well! Close some of the sub primes. One is a secured card with 1k on it! I can be the one to benefit from that interest! Ha ha! I think the Amex and the card from my CU are good. Will probably keep one of the small ones just for kicks. I really don't want more than that.

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 12:55:26 GMT

@Anonymous wrote:
Why do people need or want so many credit cards? If you don't need all of that credit why have the accounts open I don't think I'd want to manage 8 credit cards. In fact, now that I will have an amex and a card with my cu I think I will get rid of the secured card and the low limit cap one. The thought of all of those accounts stresses me out. I live virtually debt free now and only purchase to help with my score. If I have all that I need and don't forsee myself needing any in the near future (have car, almost house) I think it's best to just garden. Is my logic sound? Please shed some light!

few reasons.

different cards give different bonuses for different types of purchases.

There's stuff in day to day life that one must buy. Some of those items cost the same regardless of how you pay (cash, credit, debit, etc).

If they are going to cost the same regardless of payment type, and you are forced to pay for it anyhow because you need it, then might as well use a credit card that maximizes the rewards you're going to get.

Think of it as a "discount".

There are of course times where paying in cash or debit results in a bigger discount than using a credit card, i.e. shopping at costco, with the exception of amex being allowed.

Some people, especially business owners, have credit cards for work, and some other cards for personal usage.

This actually makes accounting much easier, since everything can get too confusing about which charge is for work or for personal, especially if you are trying to recollect about a few charges that happened 11 months ago.

Some cards have different perks. For example a united card gives you a free checked bag.

Assuming those cards have no AF, or you can somehow utilize the card more than what the AF is, you're actually getting a "discount" on money otherwise you will be forced to spend.

It does makes things really confusing having to manage so many cards.

But technology has helped out in many ways.

The easiest way? Set up automatic payment in full. And you won't ever have to worry about missing a payment.

Make sure your checking account is funded of course.

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 13:23:02 GMT

An additional perspective! So appreciated and makes a lot of sense. Thank you!

Re: Enlightenment needed...

theoldnocreditmaster — Fri, 10 May 2013 13:24:24 GMT

There are some other factors that come in to play as well. However, when you apply for an auto loan, mortgage, home equity or even some cards such as Simmons First or Iberia Bank credit cards they do manual review of your profile with actual Underwriters, to verify income, debt etc.

Having multiple accounts with various lending institutions shows you are capable of paying your debts with them on time every time. If you can keep track of 8 credit accounts without carrying large balances, and never being late, you have a much better chance to negotiate rates, payment terms and other incentives offered by the creditor.

It also shows that you are capable of having well established relationships with other and sometimes diverse creditors.

In today’s world, creditors try to get you in the door, whether rewards based, discounts, 0% offerings etc. We have no choice except to have many accounts. For an example, if you have only two cards and want a new TV, but don’t want to empty your checking account to pay for it or pay interest because you have good credit, what do you do if Best Buy is offering 0% on the purchase with a Best Buy card?

You take advantage of it with your good credit. The next thing you know, you have another credit account. Same thing happens if you want a new riding mower from Tractor Supply with 0% financing. Your current cards offer no incentive to pay over time. Most reward based cards have high interest rates regardless of how good your credit is because they don’t want you to carry a balance. If you do, and pay any interest, your rewards become useless.

Back in the day, there was always the stigma that if you have too much credit or too many credit cards, you could “max” them out and leave them holding the debt. They have internal controls to prevent that from happening. There’s no way you could max out all off your 8 or 10 credit cards without some form of adverse actions being launched by the creditor holding the debt or others that may be subject to be holding it.

Re: Enlightenment needed...

jsucool76 — Fri, 10 May 2013 13:27:15 GMT

I just have an unhealthy addiction. The problem that arises for me is, when i take out my wallet to pay for something, and a friend or family member sees all my cards they immediately assume I'm in debt. Hurts my ego.

So many people think that because you have a lot of cards, they're automatically all maxed out. Everyone always says "well why do you need all of them?"

Because i want 5% at restaurants, and bookstores, and gas, and home improvement, and restaurants again, and again, and gas again. XD... Mainly just because I can. Lol

Re: Enlightenment needed...

bluesnowman — Fri, 10 May 2013 13:35:30 GMT

I really think it depends on how disciplined you are and how much control you excercise. I have a total of 5 (maybe 6) cards that I use and it helps me keeping track of where and how much I spend. I always have 1,200-1,400 in my checking account, so any charges I make, I'm sure I can pay it off. Sometimes, I decide to take cash out and how use it because I don't want to rack up a huge, huge bill in one month. It just depends, and how you handle your money and finances says a lot about who you are..IMO.

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 14:01:37 GMT

@Anonymous wrote:
@Anonymous wrote:
Why do people need or want so many credit cards? If you don't need all of that credit why have the accounts open I don't think I'd want to manage 8 credit cards. In fact, now that I will have an amex and a card with my cu I think I will get rid of the secured card and the low limit cap one. The thought of all of those accounts stresses me out. I live virtually debt free now and only purchase to help with my score. If I have all that I need and don't forsee myself needing any in the near future (have car, almost house) I think it's best to just garden. Is my logic sound? Please shed some light!
few reasons.
different cards give different bonuses for different types of purchases.
There's stuff in day to day life that one must buy. Some of those items cost the same regardless of how you pay (cash, credit, debit, etc).
If they are going to cost the same regardless of payment type, and you are forced to pay for it anyhow because you need it, then might as well use a credit card that maximizes the rewards you're going to get.
Think of it as a "discount".
There are of course times where paying in cash or debit results in a bigger discount than using a credit card, i.e. shopping at costco, with the exception of amex being allowed.

Some people, especially business owners, have credit cards for work, and some other cards for personal usage.
This actually makes accounting much easier, since everything can get too confusing about which charge is for work or for personal, especially if you are trying to recollect about a few charges that happened 11 months ago.

Some cards have different perks. For example a united card gives you a free checked bag.
Assuming those cards have no AF, or you can somehow utilize the card more than what the AF is, you're actually getting a "discount" on money otherwise you will be forced to spend.

It does makes things really confusing having to manage so many cards.
But technology has helped out in many ways.
The easiest way? Set up automatic payment in full. And you won't ever have to worry about missing a payment.
Make sure your checking account is funded of course.

I think the reasons given here are the major reasons why people have multiple cards (and then there are those who get them to build self-imposed targets, 300K CL for example, but there are always addicts).

That said, it doesn't always make a whole lot of sense, as you add more and more cards for the special niche, the actual amount of money that card saves you becomes very small. (e.g. a 5% saving on something you spend $50 a year, yes, you save $2.50. Is it worth the hassle. Up to the individual).

And each card has an implied monthly payment when it comes to mortgages (regardless of actual balance). Having lots of cards can hurt in that situation.

Re: Enlightenment needed...

navigatethis12 — Fri, 10 May 2013 15:16:41 GMT

I have 19 personal cards and 3 business cards and am only 22. I have no problem managing all of them and am contemplating adding more in a few months. Most were opened for bonuses or zero interest, but I use some depending on the cashback. Most have the standard 1% back and don't get used often, but all except one have a category where they earn more. The ones I don't use, I keep open for age since my history just turned three this April.

It's also good for me to be able to spread spending out throught the month and not have to pay before the statement closes all at once. Business cards are especially good at hiding debt, so I will likely never close those.

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 18:27:46 GMT

@jsucool76 wrote:
I just have an unhealthy addiction. The problem that arises for me is, when i take out my wallet to pay for something, and a friend or family member sees all my cards they immediately assume I'm in debt. Hurts my ego.

So many people think that because you have a lot of cards, they're automatically all maxed out. Everyone always says "well why do you need all of them?"

Because i want 5% at restaurants, and bookstores, and gas, and home improvement, and restaurants again, and again, and gas again. XD... Mainly just because I can. Lol

Hee hee! I like that response!

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 18:30:41 GMT

Wow! 19 cards is about 15 more than I care to deal with! Impressed that you juggle it all so well!

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 19:14:29 GMT

I use my cards for the rewards. Specifically for cashback.

I may not have the huge budget some of the other users do, but every little bit saved helps. When I shop online I also try to use a referral site so I can get even more cashback.

Re: Enlightenment needed...

Gunnar419 — Fri, 10 May 2013 19:22:39 GMT

Within the last six months, after exposing myself to the temptations of MyFico, I went from having two cards to having seven.

I know, a lot of people around here app for seven cards before breakfast and think nothing of it. For me, seven felt like too many. I found myself making spreadsheets to track them all, constantly checking my autopay setups, and still worrying that I'd miss a payment.

Having seven cards and 6% utilization did great things for my score, but I kept thinking about canceling some of the cards, and the only reason I didn't was that they're all good cards. No sub-primes, no big fees. I'm not a big spender, though, and it felt stupid having all those cards.

Then an opportunity came up to get a nice little foreclosed house dirt cheap. I needed a few thousand dollars that I didn't have. I was able to pull it off only because I had all those cards. It wasn't just having the available credit, either, but having the particular combination of cards -- one that I could write a small BT check on, one that I could take a large cash advance on, another that I could then BT those funds to at a very good rate so I could avoid paying the terrible cash advance interest.

Ironically the two cards I was most thinking of canceling were two of the most useful.

Now I'm in more debt, but still under 20% util, and I have a house that will soon be very livable.

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 19:27:40 GMT

@Gunnar419 wrote:
Within the last six months, after exposing myself to the temptations of MyFico, I went from having two cards to having seven.

I know, a lot of people around here app for seven cards before breakfast and think nothing of it. For me, seven felt like too many. I found myself making spreadsheets to track them all, constantly checking my autopay setups, and still worrying that I'd miss a payment.

Having seven cards and 6% utilization did great things for my score, but I kept thinking about canceling some of the cards, and the only reason I didn't was that they're all good cards. No sub-primes, no big fees. I'm not a big spender, though, and it felt stupid having all those cards.

Then an opportunity came up to get a nice little foreclosed house dirt cheap. I needed a few thousand dollars that I didn't have. I was able to pull it off only because I had all those cards. It wasn't just having the available credit, either, but having the particular combination of cards -- one that I could write a small BT check on, one that I could take a large cash advance on, another that I could then BT those funds to at a very good rate so I could avoid paying the terrible cash advance interest.

Ironically the two cards I was most thinking of canceling were two of the most useful.

Now I'm in more debt, but still under 20% util, and I have a house that will soon be very livable.

Ah, but that's the beauty of the "game".

With good enough credit, you can easily app for a card that allows for 0% balance transfer and offset at least some of your debt to a low or no interest account.

Re: Enlightenment needed...

Gunnar419 — Fri, 10 May 2013 19:31:44 GMT

Ah, but that's the beauty of the "game".

With good enough credit, you can easily app for a card that allows for 0% balance transfer and offset at least some of your debt to a low or no interest account.

Agreed. I didn't mention it in the post you quoted, but the debt for the house ended up being financed mostly at 0% thanks to BT availability. The flexibility those cards gave me was fantastic.

Re: Enlightenment needed...

kroberts67 — Fri, 10 May 2013 19:51:50 GMT

I have 14. Some I don't ever use and down the road when I get higher limits and don't need the help with UT I can close them. I have a spreadsheet that I made for everything, it's really easy for me to keep track this way. In additional to the due dates and reporting dates I list my real balance, the reported balance, my UT... and so on... I have them color coded according to the ones I PIF with my paycheck on the 15th, and likewise for my end of the month paycheck. Super simple. (But then I also obsess about keeping it orderly, haha)

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 20:17:15 GMT

@kroberts67 wrote:
I have 14. Some I don't ever use and down the road when I get higher limits and don't need the help with UT I can close them. I have a spreadsheet that I made for everything, it's really easy for me to keep track this way. In additional to the due dates and reporting dates I list my real balance, the reported balance, my UT... and so on... I have them color coded according to the ones I PIF with my paycheck on the 15th, and likewise for my end of the month paycheck. Super simple. (But then I also obsess about keeping it orderly, haha)

We must be related! My spreadsheet has all the same fields for EVERY pay period projected out to the end of 2015. Even have a special section for my BlueBird.

Re: Enlightenment needed...

Anonymous — Fri, 10 May 2013 21:13:40 GMT

@Anonymous wrote:
@kroberts67 wrote:
I have 14. Some I don't ever use and down the road when I get higher limits and don't need the help with UT I can close them. I have a spreadsheet that I made for everything, it's really easy for me to keep track this way. In additional to the due dates and reporting dates I list my real balance, the reported balance, my UT... and so on... I have them color coded according to the ones I PIF with my paycheck on the 15th, and likewise for my end of the month paycheck. Super simple. (But then I also obsess about keeping it orderly, haha)
We must be related! My spreadsheet has all the same fields for EVERY pay period projected out to the end of 2015. Even have a special section for my BlueBird.

Or, to maximize your finances:

a) put all credit cards on auto pay, full balance on due date

b) with the time saved from not updating the spreadsheet, go and get a part-time minimum wage job!

Re: Enlightenment needed...

vpae — Fri, 10 May 2013 21:25:54 GMT

This might help paint a picture.. it's not 100% accurate obviously as YMMV but it does put things into perspective

http://blog.creditkarma.com/wp-content/infographic.jpg